BP Exploration Operating Co Ltd v Chevron Transport (Scotland)

Factual and Procedural Background

On 28 February 1990 the vessel “Chevron North America” berthed at The Terminal for loading operations managed by Company A. Weather conditions deteriorated, leading to alleged damage valued at approximately £3 million to four loading arms. Three separate damages actions were subsequently raised:

• Action 1 (21 February 1995) against Company B, originally believed to be the vessel’s owner.
• Action 2 (16 June 1995) against Company C, later admitted to be the registered owner.
• Action 3 (28 September 1995) against Company D, admitted bare-boat (demise) charterer.

All three actions advanced claims in (i) contract, (ii) negligence, and (iii) strict statutory liability under section 74 of the Harbours, Docks and Piers Clauses Act 1847 as incorporated into the Zetland County Council Act 1974. The lower courts:

• Dismissed Action 3 on prescription grounds.
• Excluded the section 74 claim in Actions 1 and 2 on the basis that “owner” meant the charterer, not the registered owner.

The House of Lords (five Law Lords) heard conjoined appeals from all three actions.

Legal Issues Presented

1. Whether section 74 liability attaches to the registered owner or to a bare-boat charterer when a vessel is demise-chartered.
2. Whether Company A is time-barred in its claim against Company D under section 6(1) of the Prescription and Limitation (Scotland) Act 1973, given alleged error induced by other defendants.
3. Whether averments of personal bar against Company B should permit the statutory claim to proceed.
4. Whether averments regarding the existence and terms of the bare-boat charter require proof before answer in Actions 1 and 2.

Arguments of the Parties

Appellant’s Arguments (Company A)

• “Owner” in section 74 retains its ordinary meaning of registered owner; extending it to charterers defeats the Act’s purpose of providing a clear, fault-free route to recovery.
• The five-year negative prescription was interrupted under section 6(4) because error as to the liable party was induced by words or conduct of the defenders.
• Personal bar prevents Company B from denying ownership, allowing the statutory claim to proceed.
• All disputed factual averments—particularly regarding the charterparty—should be remitted to proof before answer.

Respondents’ Arguments (Companies B, C and D)

• “Owner” in section 74 should follow the entity controlling navigation; therefore liability rests on the bare-boat charterer (Company D).
• Any obligation owed by Company D prescribed because proceedings were served more than five years after the incident and the section 6(4) exception is inapplicable once the error was discovered.
• The personal-bar averments against Company B are irrelevant, and charterparty averments in Actions 1 and 2 are insufficiently pled.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Section 74 “Owner” Interpretation: The House held unanimously that Parliament in 1847 intended “owner” to carry its normal sense of registered owner. The purpose of the provision was to give harbour authorities a simple, strict-liability remedy without litigating questions of fault or operational control. Provisions allowing detention and sale of the vessel, and the right of the owner to recover over under section 76, reinforced this conclusion. Authorities that had extended “owner” to charterers in other statutory contexts were distinguished as context-specific and inconsistent with the policy underpinning section 74.

2. Prescription under the 1973 Act: Interpreting section 6(4) expansively, the Lords held that “refrain” covers any period during which the creditor in fact fails to sue because of induced error, even if the creditor was unaware of the true position. The excluded period therefore commences when the error begins (circa 1990) and ends when the creditor either discovers or reasonably could have discovered the truth (18 August 1995). Although subsequent delay in effecting service is not excluded, the residual time within the five-year period remains sufficient for the claim to survive, warranting a proof before answer.

3. Personal Bar and Charterparty Averments: Given that statutory liability falls on the registered owner, the averments of personal bar against Company B remain potentially material and should be proved. Likewise, averments about the bare-boat charter remain relevant to contractual and negligence claims and are remitted to proof.

Holding and Implications

Holding: The House of Lords

• ALLOWED the appeals in all three actions.
• Declared that “owner” in section 74 means the registered owner, not the bare-boat charterer.
• Restored the statutory claim against Company C and, subject to personal-bar proof, against Company B; excluded it against Company D.
• Remitted all three actions to proof before answer, save for limited deletions in Action 3 concerning the excluded statutory claim.

Implications: The decision provides authoritative clarification that registered ownership—not operational control—determines liability under section 74. Harbour authorities may proceed directly against the registered owner without investigating charter arrangements, streamlining recovery. The ruling also re-affirms a broad, creditor-friendly approach to section 6(4) of the 1973 Act, signalling that Scottish courts will readily exclude periods of induced error from prescription calculations.